How Big Is The Risk Of El Nino? Nirmal Bang's Thematic View
Too early to panic as La Nina conditions are only waning
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Nirmal Bang Report
News reports are rife highlighting the impending risk of El Nino. However, looking at data from the Australian Bureau of Meteorology, we believe it is too early to panic.
Australian BoM has highlighted that La Nina conditions (which generally bode well for Indian monsoon) are likely nearing their end. Yet, it is still far from an El Nino event.
We will not trivialise the risk of an El Nino event on India’s monsoon rainfall in CY23. Data over the past 20-odd years indicates that the Australian BoM has called out an El Nino event in four years (2002, 2006, 2009 and 2015).
In three out of these four instances of El Nino (barring 2006), India experienced below normal monsoon rains.
Nevertheless, neutral conditions have not usually resulted in an extremely bad monsoon for India.
Moreover, the Australian BoM has further emphasised that most climate models are suggesting neutral conditions rather than an El Nino event.
An El Nino event and a poor monsoon usually leads to a decline in Agricultural gross domestic product in India , but the impact on food inflation is more tenuous and may depend on underlying demand.
In addition, in the event of an El Nino and a poor monsoon in India, comfortable reservoir levels (mostly above their 10-year average) provide some cushion. However, eastern states like Bihar and West Bengal may face stress on the back of a poor monsoon in 2022.
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